An firm that is currently all-equity is subject to a \(30 \%\) corporate tax rate. The firm's equityholders require a \(20 \%\) return. The firm's initial market value is \(\$ 3,500,000\), and it has 175,000 shares outstanding. Suppose the firm issues \(\$ 1\) million of bonds at \(10 \%\) and uses the proceeds to repurchase common stock.

Assume there is no change in the cost of financial distress for the firm. According to \(\mathrm{MM}\), what is the new market value of the equity of the firm?